Health system, other services feel pain of budget cuts

Susquehanna Health could lose much needed Medical Assistance funding as a result of proposed state budget cuts next year.

With haggling over the spending plan ongoing, it is unknown precisely how much the health system stands to give up.

Medicaid payments for Susquehanna amount to $18.7 million annually, according to figures provided by the health system.

But Susquehanna President and CEO Steven P. Johnson hopes that funding cuts will be restored.

"The 2009-10 state budget is presenting a fiscal challenge not experienced in the state in decades," he said. "The Legislature needs to work with the governor to find ways to overcome the financial shortfall. Cutting Medical Assistance funding to providers is not the place to find budget cuts."

Gov. Ed Rendell has proposed slashing $77.9 million from payments to Pennsylvania hospitals. Those cuts could affect federal matching funds, which comprise 58 percent of every Medicaid dollar spent by the state.

In other words, the loss of state dollars would represent a double whammy for all hospitals as federal funding also could be lost.

Medical Assistance payments to hospitals, health system officials noted, long have been significantly below actual costs. Further cuts only will exacerbate an already critical financial situation.

Susquehanna stands to lose an additional $800,000 for its three hospitals in "supplemental" Medicaid funding as a result of proposed state budget cuts next year. Less funding will mean fewer dollars targeted toward low-income residents for vital health care needs such as obstetrical and neonatal services, medical education and other services.

"Fortunately, Medical Assistance patients are a small portion of the patients seen at Williamsport, Divine Providence and Muncy Valley hospitals," Johnson said.

According to health system figures, about 14 percent of inpatients and 16 percent of outpatients were Medical Assistance patients during fiscal year 2008.

State Health Department spokeswoman Stacy Kriedeman said the agency responsible for providing a host of medical services to residents across Pennsylvania is bracing for budget cuts as well.

On Wednesday, the governor announced an additional $9 million in cuts to the agency on top of the $25.4 million proposed earlier.

"The cuts we make will not necessarily be regional cuts at the county level," Kriedeman said. "They may impact health department activities across the board. We are looking at our critical mission. We will look at our key priorities. If they are not performing to expectations, they may be subject to reductions."

Everything is being done to preserve direct health services provided by the department, she said.

Small agencies feel the pain, too.

Valley Prevention Services Executive Director Geoffrey Arthur said questions about what programs will be funded leave his agency in a bind.

The Williamsport-based drug and alcohol education service provides outreach to schools and other organizations, some of which rely on state funding to contract with the agency.

"What that means is that I either go in and provide that service and take a risk that I don't get reimbursed. Or, I just don't provide the service," he said.